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Quantified at Last: Investments in Digital Technologies Drive Profits, Productivity

MD Staff

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Digital technologies such as robotics, mobile and social media, the internet of things, artificial intelligence and big data analytics are transforming the global economy. Overall, investments in these technologies are leading to an increase in productivity and EBITDA for a majority of companies. However, several factors influence the return on investment. A new report, Maximizing the Return on Digital Investments, published today by the World Economic Forum in collaboration with Accenture, looks at the impact of investments in digital technologies across 14 different industries.

The data shows that gains are not evenly distributed. The growth associated with these investments is currently driven by the top 20% of companies (by productivity) within each industry sector. Without broader implementation, an “industry inequality” could emerge, creating a small group of highly productive industry leaders and leaving the rest of the economy behind. SMEs in particular, often the driver of national economies, could suffer from competitive disadvantages.

The findings are based on a survey of over 16,000 businesses between 2015 and 2016 and mark a first attempt at quantifying the business impact of digital technologies. Among the key results are that investment in a combination of cognitive technologies, the internet of things, robotics and mobile/social media led on average to an increase in productivity three times higher than investments in any of these technologies individually.

The report, which aims to help business leaders make informed investments in technology, finds considerable variation between industries when it comes to digital investments. On average, heavier industries realize greater returns in productivity. Chemistry and Advanced Materials registered the greatest returns, with industry leaders achieving 160% additional EBITDA per employee investing in these technologies and 120% for the remainder of the sector. Gains by Professional Services businesses follow, generating 80% and 40% respectively. The heavier industries claim the highest gains from investment in robotics (90%), while mobile and social media provide a 70% return for service-oriented companies.

Of the technologies analysed, cognitive technologies offered the highest return, generating $1.90 per employee for every dollar invested. It is expected that the largest investment in these technologies between 2016 and 2020 will be in the internet of things as IoT build-out will generate the huge amounts of data needed for artificial intelligence and big data analytics to flourish.

“Digital transformation is a key driver of sweeping change in the world around us, improving people’s lives and opening new opportunities for businesses to grow and create value,” said Jonas Prising, Chairman and Chief Executive Officer of ManpowerGroup. “Yet gaps occur when innovation moves faster than organizational and societal frameworks allow. Wherever companies are on their digital journey, the path is clear: they need to invest in the technologies that maximize business opportunity on the one hand while developing people’s skills and capabilities to be successful in the digital age with the other.”

Would-be technology investors should be aware, however, that while industry leaders on the whole generate higher returns than followers, the survey finds that when it comes to internet of things and cognitive technologies, followers are able to benefit from the best practices and reduced costs made possible by pioneering leaders, and thus achieve a greater return.

“At the moment, companies are running the risk of investing in digital technologies without a full picture of the impact of those decisions. This is either because they find the benefits hard to quantify, they are worried about disrupting their own business model or they just don’t know how to make the right investments,” said Bruce Weinelt, Head of Digital Transformation of the World Economic Forum. “This report provides proof of positive returns on digital investments and offers executives practical guidelines.”

The report identifies five key drivers for maximizing value from digital investments:

Agile and digital-savvy leadership: nimble decision-making process combined with strategic vision across all management levels

Forward-looking skills agenda: Reskilling and aligning hiring around innovation to create a flexible, accountable workforce

Ecosystem thinking: success is increasingly dependent on customers, partners, and supply chain and other stakeholders

Data access and management: real-time insights are only possible with robust data infrastructure, warehousing and analytics

Technology infrastructure readiness: Effective use of cloud storage, cyber security, interoperability and transparency is key

The report was developed with input from Arne Sorenson, President and Chief Executive Officer, Marriott International, and Jonas Prising, Chairman and Chief Executive Officer, ManpowerGroup. It is part of the Forum’s Digital Transformation Initiative launched in 2015. Over the past three years, the initiative has analysed the impact of digital transformation across multiple industries with inputs from more than 450 experts, including over 200 chief executives.

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Huawei case: The HiFi Geostrategic Gambit

Juan Martin Gonzlez

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In a general, comprehensive, strategic outline of the global scenario we can see that China is being harassed on several fronts by the US: commercial pressures, diplomatic maneuvers to block the progress of infrastructure projects (OBOR/New Silk Road), at technological level, the boycott/ restrictions against Huawei. These are some of the current modalities of strategic competition between great powers, without involving the direct use of hard / military power, which we could well consider a Cold War 2.0.

Analyzing the factors and interests at stake, the events in full development during the last months are not surprising, as the advances of the US government against the Chinese technological giant Huawei. Since the arrest of its CFO, Meng Wanzhou, daughter of the founder of the company, to accusations of espionage, boycotts and diplomatic pressure to annul Huawei’s advances in several countries.

Huawei is the flagship, the spearhead of the Chinese technological advance. This onslaught is not a coincidence. While formally not having direct links with the Chinese government, Huawei has a prominent role in the Chinese strategic technological plan “Made in China 2025”, because of its development and implementation of 5G networks, key part of the plan, which are estimated to be available around soon.

The strategic approach is to change the Chinese productive matrix towards a “High Tech” economy, of design and innovation, to position China in the forefront in the technological advanced sectors of the modern economy (artificial intelligence, biotechnology, robotics, automation, the internet of things, telecommunications, software, renewable energies, and the element that is in the most interest for us to analyze, the 5G). In Washington, they do not feel comfortable with Chinese advances.

The Eurasia Group consulting firm argues that the installation of 5G networks will involve one of the biggest changes in our time, comparing its appearance with major breaks in the technological history such as electricity. Some specialists, websites and the press have coined the term “Sputnik” moment, by comparing the potential impact of competition for the development of 5G technologies with the space race in the Cold War at the time.

The 5G will allow the use of faster network data, as well as the widespread and coordinated use of advanced technologies such as artificial intelligence, the internet of things, smart cities, automation, improvements in health, and in the military field.

The US has put pressure on several of its allies (Australia, New Zealand, Germany, Great Britain, and Canada to name some) to block Huawei’s advances in services and investments in their countries, while restricting the purchase of Huawei’s products and services on North American soil.

While it is true that several countries could give in from the pressure from Washington to “encircle” Huawei and restrict its services and products, so is the fact that many other countries, especially the many that have China as their main trading partner, in addition to all the pleiad of emerging and developing countries that are being seduced by the economic possibilities, and in this specific case, technology offered by China and its companies. What it would imply, a worldwide competition between American diplomatic muscle and Chinese sweet money.

And also in commercial terms, the progress of Huawei into the top of the tech companies is remarkable, due to its production methods and its business model, having surpassed, for example, APPLE among the largest companies that sells mobile phones being only second to Samsung.

Does anyone remember free trade? Competition? What’s up with that? Or was it just a trick? It seems that in the global economic game, the US throws the chessboard away when it loses, and uses the geopolitical muscle, without any problem, following the Groucho’s Marx doctrine: “Those are my principles, and if you don’t like them… well, I have others.”

The fears about Huawei’s technology are hiding a power struggle, a hegemonic dispute over technology. So far the accusations of espionage against this corporation perhaps are valid in theoretical sense, but unprovable in facts, what left them as mere speculations. The accusations by the US against Huawei, through the speech of “the threat of espionage” are unbelievable, and hypocritical in some sense, and the speech is marked by a double standard… Who represents the threat?

is the same US that nowadays “advises” its allies and other countries to “protect” themselves against the “threat” of Huawei’s espionage in favor of its government, the same country that spied on its own allies in a wicked way, if we remember the cases that Assange and Snowden brought to light.

We can also highlight recently the Cambridge Analytica scandal – much of which has been well predicted by prof. Anis H. Bajrektarevic in his influential manifesto about the McFB world of tomorrow. The Cambridge Analytica fiasco plainly showed the unholy relations between the big technological “independent” corporations like Facebook and Google with the political power in the West.

Conclusions

Technological competition is another chessboard of this new multilevel and multidimensional XXI Century Great Game, where the great actors move their pieces.

5G is the focal point for a global rush to dominate the next wave of technological development – a race many policymakers worry the U.S. is already losing, and that’s why they act in this aggressive way. The strategic competition for advanced, high technologies such as 5G, and innovations in the fourth industrial revolution, will mark the “podium” of the great powers of the 21st century.

The technological new cold war between the two largest economies and powers in the world shows no signs of diminishing, either the strategic competition.

Who will win this Great Game on the chessboards? The patience / precaution and forecast of the game of Go, or the strong bets and bluffs of poker.

The geostrategic chessboard is already deployed. Players already have their cards in hand, and have moved their tokens. Prestige is to come.

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Youth in the Global South Must Join Forces for Their Future of Work

Maria Victoria Alonsoperez

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I believe that the developing world is full of opportunities for young people because many of us have the energy and eagerness to make a difference in the world. In many cases the solutions to problems in communities are simpler than they appear. It just needs someone to push. I know from first-hand experience that there is nothing more rewarding than creating a venture or project that has an impact.

In 2001 I witnessed a foot-and-mouth disease outbreak among cattle that severely damaged the economy of Uruguay, as well as other countries’ in the region. Many years later, in 2012, after graduating as an electrical engineer and working with small satellites, I heard about a competition for young innovators organized by the International Telecommunication Union. They were looking for technological inventions that could solve a problem in a particular region. I immediately thought about the foot and mouth disease outbreak and used my knowledge of space technology to create a system that could monitor anomalies in cattle remotely. I submitted the idea and some months later found out I had won the competition! With the cash prize I founded Chipsafer, a monitoring platform that analyses cattle behaviour using data transmitted from trackers installed in their collars. Besides detecting anomalies in cattle behaviour and combating cattle theft, Chipsafer can also help improve the decisions farmers make relating to the production process.

Countries from the Global South should join forces to surf on the wave of technological revolution and benefit from innovative solutions like these to overcome challenges and to achieve a better and more sustainable future. That’s what we mean by South-South cooperation.

Young people – students, entrepreneurs, professionals, activists – need to play a part in this too because they are drivers of change. Yet, with 65 million young people unemployed globally, they still face many challenges.

In a few weeks I will be part of a panel at an ILO event in Argentina on the future of work for youth, with a focus on developing countries. It will take place on the sidelines of the Second High-level United Nations Conference on South-South cooperation (BAPA+40).

My fellow panellists will include Rebeca Grynspan, who was a member of the ILO Global Commission on the Future of Work, as well as workers’ and employers’ representatives. We’ll look at the issue from three angles; policies for skills development, green jobs, and social dialogue. The aim of the session is to provide recommendations for BAPA+40 participants on the effective integration of youth employment policies into South-South and triangular cooperation (where developed countries or multilateral organizations support South-South cooperation).

I plan to talk about the challenges for youth in the context of the future world of work and discuss the impact of South-South cooperation in promoting decent jobs for youth.

Technology is revolutionising the world, and the world of work is no exception. I believe all stakeholders, whether they are international institutions, governments, employers’ or workers’ organizations, must accept responsibility and take collective action to build the future of work that we want. South-South and triangular cooperation must be part of the answer.

ILO

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Artificial Intelligence in Knowledge Societies: A ROAM Approach – Open Data and AI

MD Staff

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The session “Open Data and AI” organized within the framework of “Principles for AI: Towards a Humanistic Approach?” on 5 March 2019 requested UNESCO to continue leveraging its convening power to increase awareness around artificial intelligence and big data,  support development of inclusive policy on Open Data and support upstream and downstream capacity enhancement.

The workshop noted Data as an essential element for the development of artificial intelligence. The availability of large amounts of user data through services on mobile phones and internet of things among other sources, has led to a variety of AI applications and services. However, there remain many challenges. These challenges encompass issues of access, privacy, discrimination and openness. Several of these challenges are within UNESCO’s mandate of building inclusive knowledge societies for peace and sustainable development.

Ms Dorothy Gordon, Chair of the Information for All Programme at UNESCO pointed out that “despite the fact that we have a huge interest from many donors, we do not seem to have done very much systematically to prepare African countries to have useful data … [and] in a searchable format that can be combined with other sources to … yield something [beneficial]”. She stressed the need to bridge gaps in terms of the availability of legacy data, setting policy standards, and enhancing capabilities of people to work with local data sets.

Ms Constance Bommelaer, Senior Director of Global Internet Policy and International Organizations at The Internet Society underlined ‘data commons’ as an interesting solution to explore but one that needs a nuanced discussion around ownership and privacy. She highlighted the need to challenge existing notion of competition and a need for “reconsideration of market values and monopolies”. Stressing the importance of access, she shared the findings of a joint study carried out by ISOC and UNESCO that showed how a combination of local language content and better access policies results in immediate economic benefits at the local level.

As a government representative, Ms Veronika Bošković Pohar, Deputy Permanent Delegate of the Republic of Slovenia to UNESCO discussed ‘regulatory sandboxes’ as a means to provide controlled environment for AI. She hoped that Slovenia’s proposed Category 2 Centre on Artificial Intelligence would be able to make several informed decisions, provide insights into technology and societal interface and create mechanisms for continuous monitoring and reporting to reduce risks posed by AI to vulnerable groups.

Speaking as a panelist representing a knowledge organization, Prof. Maria Fasli, UNESCO Chair in Analytics and Big Data at University of Essex noted the lack of understanding on AI and Big Data and expressed concerns for the difficulty faced by the academic community in accessing data collected by large technology firms for research purpose. She further highlighted the need for high quality representative data to ensure that algorithms are not biased.

Given their experience in tracking innovation trends across the world. Mr Marcus Goddard, Vice President of Intelligence at Netexplo Observatory underlined that “access to data is a necessary but not sufficient condition for innovation. Pointing out the general trends in openness, he mentioned that openness is not Silicon Valley’s top priority and convenience seems to be the norm when it comes to launch of new products and services. He highlighted that even as data is being used in smart cities to improve access and sustainability, it is also increasing the threat of surveillance.

Mr Philippe Petitpont, Co-founder of Newsbridge, a Paris based AI and Media startup, presented the scale of the data problem that the media faces today. He remarked that media companies are gathering 30 million hours of video content every year, a number that does not include social media videos. In this situation, extracting useful insights from these videos is a cumbersome task albeit one that can be performed by AI. They try to leverage AI to help journalists process large amounts of data at lower costs.

The session brought the viewpoints of multiple stakeholders to the discussion table and some of the key concerns included were:

  • Urgent need to increase awareness around artificial intelligence and big data;
  • Developing strategies to strengthen access to data for training machine learning algorithms;
  • Supporting both upstream and downstream capacity enhancement to leverage data for benefit;
  • Involving private sector actors in the discussion around access to data and data monopolies; and
  • Creating systems for addressing discrimination and biases originating through data and algorithms.

The panel members congratulated UNESCO for facilitating important discussions around issues of rights, openness, access and multistakeholder participation in the governance of data and hoped to engage with the organization for further development of issues around Open Data and AI.

UNESCO

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